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Now, Even Borrowers With Good Credit Pose Risks

By

George Anders

Updated Dec. 19, 2007 12:01 a.m. ET

Kenneth Lewis acted far ahead of the competition in 2001, when he got Bank of America out of the business of issuing subprime mortgages. While profit margins on these loans to risky borrowers seemed tempting, the bank's chief executive believed the default risks were too hefty to justify.

It took a while for Mr. Lewis to be proved right, but BofA's payoff has been huge. The big Charlotte, N.C., bank has largely sidestepped the subprime mess, emerging -- despite taking some hits on investments it made in securities tied to...